German utility RWE backs 40 percent carbon cut

Reuters News

6/4/2013 8:02:04 AM - Reuters News

BOLOGNA, Italy (Reuters) - The European Union should aim for a 40 percent cut in carbon emissions for 2030 and strengthen its emissions trading scheme, but steer clear of a fixed carbon price, the chief executive of German utility RWE AG said.

Earlier this year the European Commission outlined its vision for targets to succeed a set of policy goals that expires in 2020.

The 2020 goals include a 20 percent cut in carbon emissions compared with 1990 levels.

Since the Commission published its outline, debate has limped along, with industry often opposing any new targets.

"Heavy industry says a number beginning with 3. The environmentalists say 50, so I say 40 percent, but I don't want a carbon price floor," Peter Terium, CEO of Germany's second-largest utility, told Reuters on the sidelines of a conference held by Eurelectric, which represents EU utilities.

Britain, for instance, has set a carbon price floor.

For Terium the way forward is to strengthen the EU Emissions Trading Scheme, which has fallen to around 4 euros a metric tonne, far too low to spur a shift to lower carbon fuel.

A European Commission plan known as backloading involves removing some surplus permits from the market temporarily and was meant to be a quick fix.

But the European Parliament rejected the plan in a plenary session in April. It is expected to vote again in early July.

"I do like backloading. I even prefer set-aside," Terium said, referring to the permanent withdrawal of permits, which requires lengthy structural reform of the market.

The issue is divisive because Poland - heavily reliant on coal - opposes a higher cost of carbon. It says this would drive up energy prices and hurt the economy.

Germany has not agreed a position ahead of elections this year. Its environment minister supports a stronger emissions trading scheme, but its economy minister sees it as an extra burden for industry.

E.ON CEO Johannes Teyssen has also thrown his weight behind backloading as a first step in reforming the market.

He has said that if Europe as a whole cannot agree, it will be up to those who can find a way to go forward.

(Reporting by Barbara Lewis and Geert de Clercq; Editing by Louise Heavens)